In the theoretical literature on government design, few variables have received more attention than the size of the polity. Since Plato’s famous prediction that the optimal size of a political unit should be 5040 free citizens, the list of thinkers concerned about state size would include Aristotle, Montesquieu, Rousseau, and many of the founding fathers, among many others. One of the fathers of modern political science, Robert Dahl, devoted great attention to what he called the “elemental question of what is appropriate unit for a democratic political system … Among the vast number of theoretically possible ways of dividing up the inhabitants of this globe into more or less separate political systems, … are there any principles that instruct us as to how one ought to bound some particular collection of people, in order that they may rule themselves?” (Dahl 1967: 953). Economists have not neglected these issues, as they conform the core of the fiscal federalism literature (Oates 1972). A more recent literature, pioneered by Alesina and Spolaore’s work (1997, 2003), provides an elegant formal theoretical framework incorporating both political and economic elements in order to highlight the fundamental trade-off that the choice of the size of the policy inevitably faces: Large polities find it easier to provide more public goods, but confront the costly political problem of greater heterogeneity of preferences among the population.
Charron, Nicholas; Fernandez-Albertos, Jose; and Lapuente, Victor, "Small is Different Size, Political Representation and Governance" (2012). ICEPP Working Papers. 81.